Energy Efficiency Holds Potential for Huge Return on Investment

In the ongoing national dialogue about climate change and energy consumption, consider this another plug for the merits of efficiency. A report released this summer by the international business consulting firm, McKinsey & Co., asserts that spending more on using less will save the country a lot more than unused electrons in the long run.

The report, “Unlocking Energy Efficiency in the U.S. Economy,” claims that a $520 billion investment in efficiency through the year 2020 could cut the nation’s collective energy bill by $1.2 trillion. That’s a net savings of $700 billion, or in the vernacular of financiers, about a 135 percent return on the initial investment.

It is hard to argue with those numbers. The report examines the barriers and possible strategies for achieving greater efficiency. Despite the huge potential, it finds several impediments to efficiency in the U.S. economy, including the high upfront costs of efficiency programs, the fragmented nature of efficiency potential and the difficulty of measuring the results of efficiency.

To overcome these barriers, the report makes several recommendations. They include education to increase awareness of efficiency opportunities; more investment and incentives; new mandated codes and standards; and third-party involvement, in which utilities and government agencies purchase and install efficiency improvements that benefit end-users.

By adopting these strategies and making the proper investment, the report projects end-use energy consumption to decline from 36.9 quadrillion British thermal units (Btus) in 2008 to 30.8 quadrillion Btus in 2020. That’s a savings of 6.1 quadrillion Btus from 2008 levels and 9.1 quadrillion Btus from projected 2020 levels without the impact on efficiency.